Moderna Debuts In S&P 500, Institutions Buy Billions Worth Of Stock

Wednesday morning marked the inclusion of Moderna, Inc MRNA in the S&P 500. On July 15, the day before the inclusion was announced, Moderna’s stock bust through resistance at $245.70 and after the news was released, on July 16, the stock gapped up and soared until reaching a new all-time high of $342.51 on Tuesday.

The COVID-19 vaccine maker has seen renewed interest in its stock due to the increased spread of the COVID-19 Delta variant. On Tuesday it was announced Japan's Ministry of Health, Labor and Welfare and its partner Takeda Pharmaceutical TAK agreed to buy 50 million additional doses of Moderna’s COVID-19 vaccine.

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What Happened: After hours on Tuesday, ahead of Moderna’s debut in the S&P 500, institutions purchased massive amounts of shares in seven separate blocks. One trade was a block of 1 million shares and the other six blocks were for 2 million shares each. For each order placed the buyer paid above ask and together the trades totaled more than $3.99 billion.

Moderna opened lower but buyers came in and raised the stock up over 2%. There is a gap below, between $261 and $270, and because gaps fill 90% of the time, it’s likely Modern’s stock will trade back down in that level in the future.

The institutions that purchased the block trades could be planning to hold for an extended period of time and don’t mind if their trade goes heavily into the red in the short term.

Why It’s Important: When a block trade occurs it indicates a hedge fund or institution has taken a position in common shares. A block trade always involves large sizing and is typically handled by a blockhouse privately and outside of the open market. Because block trades don’t happen on the open market the large size of the trades doesn’t create volatility in the stock being traded.

These types of purchase orders are made by institutions purchasing a large number of a security and retail investors can find watching for block trades useful because it indicates “smart money” has entered into a position.

The Moderna Trades: Below is a look at the notable alerts, courtesy of Benzinga Pro:

• At 5:11 p.m., a trader executed a block trade above ask of 1 million Moderna shares at $307.33 per piece. The trade represented a $307.33 million bullish bet.
• At 5:16 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.
• At 5:17 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.
• At 5:36 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.
• At 5:36 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.
• At 5:37 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.
• At 5:37 p.m., a trader executed a block trade above ask of 2 million Moderna shares at $307.33 per piece. The trade represented a $614.66 million bullish bet.

MRNA Price Action: Modern trades around $309.83 at publication time.